Erick Hansen, DVD innovator, sees BlueStar offices raided by FBI

A California DVD mogul who promised to build a high-tech production facility in downtown Spokane, drawing the support of local business and political leaders, is being investigated by federal authorities who suspect him of bilking investors out of millions of dollars.

FBI agents raided the offices of BlueStar Technologies, a Blu-ray manufacturing business headquartered in former low-income housing along First Avenue, earlier this week, according to newly unsealed documents in U.S. District Court. Agents were looking for evidence that executive Erick Hansen deceived investors nationwide by fibbing about contracts he’d secured and using their money to pay for gambling debts, lavish trips to exotic locales and court-ordered restitution for earlier business dealings gone bad, the documents say.

Investigators allege Hansen and several of his associates failed to inform investors from Missouri, Illinois, Hawaii and elsewhere about money owed by a 2008 California court order totaling more than $650,000. The company is also accused of violating a court order and Washington law by soliciting investors as recently as February by telephone without properly registering with the state.

Financial records seized by the FBI show Hansen collecting about $10 million from 175 investors nationwide beginning in 2007 through this year. Several investors, some of whom pumped hundreds of thousands of dollars into the company on promises of exclusive entertainment rights and imminent production, never saw a dime of the “300 to 500 percent” returns Hansen promised them, according to investigators.

No arrests have been made, nor does it appear that any indictments have been issued. But court documents indicate FBI agents are investigating Hansen and several of his employees for potential charges of mail and wire fraud.

Efforts to reach Hansen and BlueStar Technologies on Friday were unsuccessful.

Former employees of the business, housed in the old Commercial Building at 1111 W. First Ave., also told agents Hansen would deceive investors touring the facility by dressing up the landlord and janitor in lab coats who would run blank Blu-ray discs through antiquated equipment. One employee said Hansen referred to this process as “managing the perception.”

Hansen has earned accolades for pioneering the digital video disc (DVD) format and is credited as the first to incorporate a DVD company on American soil in 1995. His professional biography lists a collaboration with Steven Spielberg and a writing credit on an independent film in post-production that attracted producer Kimber Eastwood, daughter of Clint Eastwood. In 2009, Hansen announced he’d be teaming up with Joe Jackson, father of the late “King of Pop” Michael Jackson, to produce entertainment discs for the elder Jackson’s new record label.

In a promotional video announcing the partnership, Hansen sits next to Jackson and mentions the Spokane facility specifically, calling it “a great factory” that was built underground to be “environmentally friendly.”

Several investors told the FBI they were induced by promises from Hansen he’d have exclusive rights to unseen home videos of Michael Jackson. But the provider of that material told investigators Hansen had violated the terms of their contract and lost the rights to the footage years ago. Another promise of exclusive rights to a Canadian animated film proved false, as the distributor told the FBI that Hansen had only received a courtesy copy of the movie, not rights to reproduce and sell it.

When Hansen announced he’d be converting the building to a Blu-ray manufacturing plant in 2007, he received the blessing of then-Spokane Mayor Dennis Hession, who appeared in a promotional video for the company. At the time, many questioned the deal’s displacement of dozens of low-income residents who were living in the building with assistance from the Department of Housing and Urban Development.

Mayor Mary Verner later penned a letter endorsing the company, according to a public records request by The Spokesman-Review in 2008.

“I urge you to consider helping Blue Ray Technologies grow into a cornerstone for Spokane and Eastern Washington,” Verner wrote, before Hansen’s company changed its name to obtain a license from an industry regulator to produce Blu-ray discs, a high-definition video playback technology. The Blu-ray Disc Association said Hansen’s company name was too similar to its own.

Plans to open the building’s top floors to low-income residents were scuttled in favor of opening apartments to college students interested in learning the digital entertainment trade, and investigators say Hansen maintains a residence on the building’s top floor.

Employees came forward to investigators after increasing evidence that Hansen was using investors’ funds not only to pay back court-ordered debts, but also for personal expenses. One employee who kept the books for the company said Hansen spent more than $6,000 on a business trip, and another mentions $1,500 spent on lingerie during a trip to Hawaii, according to court documents.